Smarter Money: Why Money Managers Keep Mum About Their Performance

The law requires it, for one.
By Jim Cramer ,

Doesn't it seem unfair that some managers have to take heat about their performance while others don't reveal how they are doing? Doesn't it seem illegitimate for some to be able to throw rocks at others while not revealing their numbers themselves?

If you think, as I do, that it's dead wrong, take your case to the federal government, because, the Feds, not the managers, are to blame. Lately, I have read a number of articles and emails from people saying that they wish that all columnists who run money would disclose their performance, not just those who want to. I couldn't agree more.

But the government disagrees. If you are running a hedge fund (one of those funds that is only for accredited investors), your lawyers have told you that you are

never

to discuss your performance anywhere. If you do so, and the performance is good, you might be perceived as someone holding himself out as a registered investment adviser. You might be perceived as someone who is advertising returns publicly -- which could lead the regulators into thinking that you are taking on unaccredited investors. You could, in short, get in

big trouble

with the

SEC

.

When the laws regarding these issues were created, no one envisioned a world where people would write about business the way we write about sports. Let's say, a year ago I wrote a piece like

the one I did about Vanguard this morning. I know people would have emailed me all day and said, "OK Cramer, how good are you? How well have you done?" And I would be helpless. I couldn't even respond. There was

never

supposed to be a single public utterance about my performance as a hedge fund manager from me. Similarly, when I was doing chats, I could never take a question about how I was doing because I would, again, run afoul of the law to protect individuals from hedge fund managers.

It was always incredibly awkward. So, consequently, I rarely attacked underperformers because I could not reveal how I was doing, which made the criticism seem hypocritical. I was incredibly proud of my performance record, but I could never mention it as long as I was in the game! Now I am free and unfettered, but others are not. Understand, though, they are not hiding behind the law. Their legal counsel is saying the same thing to them that mine said to me for so many years. It is not our fault; it is the fault of the law. At least now you know.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to

jjcletters@thestreet.com.

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